Hot Spots for Biotech Companies in the Bay Area
Facilities and Campuses designed for Biotech
The Bay Area can be split into three biotech sub-markets: the Peninsula, East Bay, San Francisco and Silicon Valley. Each offers advantages to a tenant, depending on factors such as their company’s size, budget, workforce, and overall economic value. While many biotech companies reside in the Bay Area, there is a limited number of facilities or campuses that were specifically designed for the biotechnology or biopharmaceutical fields.
The Peninsula is traditionally the home of biotechnology and is a premium location in which to conduct business. Stretching from San Francisco to Palo Alto, this area is bounded by University California San Francisco in the north and Stanford University in the south. World-class research universities such as the California Institute for Regenerative Medicine and the Gladstone Institute also reside in the Peninsula commercial real estate market.
Facilities located in this area can range from older space that was traditionally used by light industrial businesses–but were converted to new lab-specific offices to meet the needs of biotech lab users. Mission Bay, a new San Francisco-based lab complex, is expected to contribute over 3 million square feet of space over the next few years. These facilities will come at a premium, demanding some of the highest rents in the Bay Area.
The Silicon Valley has built a reputation as the high-tech hub of the world. Wrapping around the south shores of the Bay, Silicon Valley encompasses the area from Palo Alto to San Jose to Fremont. NASA Ames and the San Jose BioCenter are among the research facilities located within the area.
The dot-com bust that followed the enormous Silicon Valley growth of the 1980’s and 1990’s led to a large vacancy rate in R&D buildings. Many of these facilities are older and lack the amenities found elsewhere; thus the need for biotech build-outs is prevalent. Campuses preferred by biotech companies include McCarthy Center and Stanford Research Park, located in Milpitas and Palo Alto, respectively.
Sweeping from Hayward to Richmond and as far east as Pleasanton, the East Bay is the rising star in value for biotech companies. This sub-market is home to UC Berkeley, Lawrence Laboratories., Companies such as Bayer, Clorox, Chevron, and Kaiser have large campuses in this area. The draw of the East Bay for many companies includes commuter accessibility, affordable housing, lower lease rates than the Peninsula, a good assortment of building amenities, and overall economic value. A generous mix of old and new facilities can be found, making second and third generation lab-specific build-outs common and desirable as the lower cost alternative.
Emeryville and Berkeley are prime locations for many biotech companies due to their close proximity to the University and business-friendly atmosphere. As a result, these cities typically have very low vacancy rates and rents that tend to be higher than elsewhere in the East Bay.
Alameda, located across the estuary from Oakland, hosts two biotech hot spots including Marina Village and Harbor Bay. Richmond is home to the Berlex Campus and many R&D buildings. In recent times both Alameda and Richmond have become alternatives to the somewhat higher lease rates in Emeryville and Berkeley.
Inland cities such as Pleasanton, Dublin, and San Ramon offer a large assortment of new space and host many corporate campuses with rents that tend to be lower than the rest of the Bay Area. With the growing number of biotech businesses in the Bay Area, the East Bay is expected to become home to those looking for lower lease rates and for start-up companies.